This chapter explores enterprise systems and ERP systems (defined below) and discusses the advantages which can accrue from these types of integrated systems (as well as, though to a lesser extent, the cons). Several business processes are described in terms of an integrated enterprise system, and several SAP examples are given.----
Components of Enterprise Systems:
Enterprise Resource Planning (ERP) - By the way, does anyone know why these integrated enterprise systems have such an undescriptive name? Bonus: Try to find examples of companies that provide these add on services and provide a link to them along with your defintion/description.
Third party add-ons - complement software for an ERP system that provides full range of functionality that helps suppport an enterprise system. Many 3rd party add-ons link the internal part of the ERP with external portions of the business process i.e. sales process and customer support. (p42)
Customer Relationship Management (CRM) - software that keeps track of customer related data. Everytime a customer interacts with a company via internet, call center, sales, or customer service calls data is collected and stored. This allows vendors to keep track of customer names, addresses, and purchases. Thus they are able to track and personalize a customers shopping experience. Example of company that uses CRM software Amazon.com; Example of company that supplies CRM software Seibel systems.
Customer Self-service (CSS)- extension of CRM software that allows customers to make purchases or inquiries without the help of an organizations employees. Most commonly done over the internet. Example of company that uses CSS= itunes; Example of CSS provider= Capterra (p43)
Sales Force Automation (SFA)- another extension of CRM software that automates sales tasks such as order procesing and tracking. (p43)
Supply Chain Managment (SCM) - Helps an organization plan and execute the steps in their supply chain including processes such as demand planning and acquiring inventory, as well as manufacturing, distributing, and selling the product. From the story at the beginning of this chaper, Nestle implemented Manugistics supply chain software to integrate their organization so that each division would pay the same price for vanilla from the same vendor and the name for vanilla would be the same throughout the organziation.
Supply Chain Managment is concerned with the four important characteristics of every sale: what, when, where, and how much.
SCM as mentioned above is the interegration of business processes from the customer to the orignianl supplier and includes purchasing, materials handling, production planning and control, logistics and warehousing, inventory control, and product distribution and delivery. SCM systmes may perform some or all of these functions.
Bonus: i2 Technologies, Inc. (**http://www.i2.com/**) - uses technology to eliminate inefficiencies in the supply chain management.
Product Lifecycle Management (PLM): In order to offer integration to almost any type of business, these systems have an undescriptive name. An example of a company that provides add on services is NorthRidge Software Company (http://www.nridge.com/). They offer product lifecycle management (PLM) solutions to fit the unique needs of today’s businesses.
Bonus: Agile Software (**http://www.agile.com/plm/index.asp**) - helps companies manage their enterprise product record to accelerate revenue, reduce costs, improve quality, ensure compliance, and drive innovation.
Enterprise Systems Value Chain:
Value Chain - activities performed by a company that transform inputs into outputs and create value to the customer. = a. in the attached figure
Primary Activities- activites directly involved in marketing, selling, producing, and delivering the good or service to the customer. This includes functions such as the flow of raw materials throughout the organization, the production and delivery of a product/service, and post production services such as installation and customer support. (p48)
Support Activities- activities that supply infastructure which enable the primary activities and include functions such as procrument, information technology, human resources, and accounting. (p48)
Organization Value System- one component in a value system. That is it is one value system that extends back to the suppliers value system and forward to the customers value system. If each of these value systems are intergrated themselves they can all be integrated together. =b. in the attached figure
* Who: All agents (individuals and organizations) involved
* What: All resources exchanged
* Where: Locations where the event takes place, where resources are located before and after the event, and where agents are during the event.
* When: Time periods involved in finishing the event and exchanging resources in the future
Basic Database Terminology:
Characters-symbols such as letters and numbers that represent information
Fields- combined characters in a table cell (customer name, date, order number)
Records- combined fields containing all necessary information about an entity (organization, person) or an event (purchases/sales)
Tables - known as files, are collection of related records (sales order table/accounts receivable table)
Database - a large collection of data files organized specifically for rapid search and retrieval.
ERP Modules:
(What does SAP call modules today, lets update the terminology) SOLUTIONS; Check out other ERP vendor modules also. -Business application platforms
Sales and Distribution-(SD)** contains the functions necessary to process and record the sale of goods to customers.
Three major steps in the SD process:
1. Order entry- may begin with preparing the customer with a sales quota. When a customer places an order their information will need to be recorded, if they are not a returning customer, and their credit limit will need to be determined. After the credit limit has been determined, the customer's order will be recorded. Once the customer's order is entered, the system will add the customer's information into the database, verify credit approval, and check availability of goods.
2. Shipment- scheduling manufacturing of goods if necessary, pulling items from warehouses, packing of items, and shipment date.
3. Billing- creates invoices to send to customers (can be done simultaneously with shipment), credits accounts receivable.
Materials Management -(MM) -- module with the purpose of acquiring goods for sale or services from suppliers and then managing those goods while held in stock by the organization.
Three major steps in the MM process:
1. Creating a purchase order - starts by preparing a purchase requisition within the organization and then sending the request to different vendors. Once the request for a quotation is received back by the organization, a vendor is chosen and a purchase order is created and sent to the supplier. However, if a new vendor is to fill the purchase order, the new supplier data would need to be included in the organization's database.
2. Receiving the goods - this step includes comparing the quantity of goods received to the goods actually ordered by the organization, recording the receipt of the goods, and increasing the quantity in stock by the quantity of goods received.
3. Recording the vendor invoice - once the vedor invoice is received and entered into the database, the ERP system performs and three-way match check comparing the purchase order, the receipt, and the invoice. If all three agree, the invoice is recorded.
Financial Accounting
Controlling and Profitability Analysis
Human Resources
ES/ERP Pros:
-Single database and integrated system
-Standardized and faster business processes
-One face is presented to the customer
-Reduced errors due to entering data once, following business rules, etc.
ES/ERP Cons:
-May be complex, inflexible, and difficult to implement
-“Standardization” may hinder creative process improvements
-Unable to support traditional business processes
-Difficulties in maintaining security and accessing information
Event-Driven Architecture (EDA):
Definition: An approach to designing and building enterprise systems where business events trigger messages to be sent by middleware between independent software modules that are completely unaware of each other.
Event Driven Operations/Steps/Processes:
1. Each business event is handled individually as it appears
2.The business unit that experiences a business event "pushes" the event to the recipient
3. Business events are pushed immediately and simultaneously to all interested parties
4. The meaning and attributes of each business event is documented as a process is developed and is shared across multiple processes within the system
5. Event notification are managed in a systematic way
Enterprise Systems
This chapter explores enterprise systems and ERP systems (defined below) and discusses the advantages which can accrue from these types of integrated systems (as well as, though to a lesser extent, the cons). Several business processes are described in terms of an integrated enterprise system, and several SAP examples are given.----Components of Enterprise Systems:
Enterprise Systems Value Chain:
Event Based Data Capture:
*Who: All agents (individuals and organizations) involved
*
What: All resources exchanged
*
Where: Locations where the event takes place, where resources are located before and after the event, and where agents are during the event.
*
When: Time periods involved in finishing the event and exchanging resources in the future
Basic Database Terminology:
ERP Modules:
(What does SAP call modules today, lets update the terminology) SOLUTIONS;Check out other ERP vendor modules also.
-Business application platforms
- Sales and Distribution-(SD)** contains the functions necessary to process and record the sale of goods to customers.
Three major steps in the SD process:1. Order entry- may begin with preparing the customer with a sales quota. When a customer places an order their information will need to be recorded, if they are not a returning customer, and their credit limit will need to be determined. After the credit limit has been determined, the customer's order will be recorded. Once the customer's order is entered, the system will add the customer's information into the database, verify credit approval, and check availability of goods.
2. Shipment- scheduling manufacturing of goods if necessary, pulling items from warehouses, packing of items, and shipment date.
3. Billing- creates invoices to send to customers (can be done simultaneously with shipment), credits accounts receivable.
- Materials Management -(MM) -- module with the purpose of acquiring goods for sale or services from suppliers and then managing those goods while held in stock by the organization.
Three major steps in the MM process:1. Creating a purchase order - starts by preparing a purchase requisition within the organization and then sending the request to different vendors. Once the request for a quotation is received back by the organization, a vendor is chosen and a purchase order is created and sent to the supplier. However, if a new vendor is to fill the purchase order, the new supplier data would need to be included in the organization's database.
2. Receiving the goods - this step includes comparing the quantity of goods received to the goods actually ordered by the organization, recording the receipt of the goods, and increasing the quantity in stock by the quantity of goods received.
3. Recording the vendor invoice - once the vedor invoice is received and entered into the database, the ERP system performs and three-way match check comparing the purchase order, the receipt, and the invoice. If all three agree, the invoice is recorded.
ES/ERP Pros:
-Single database and integrated system-Standardized and faster business processes
-One face is presented to the customer
-Reduced errors due to entering data once, following business rules, etc.
ES/ERP Cons:
-May be complex, inflexible, and difficult to implement-“Standardization” may hinder creative process improvements
-Unable to support traditional business processes
-Difficulties in maintaining security and accessing information
Event-Driven Architecture (EDA):
Definition: An approach to designing and building enterprise systems where business events trigger messages to be sent by middleware between independent software modules that are completely unaware of each other.Event Driven Operations/Steps/Processes:
1. Each business event is handled individually as it appears
2.The business unit that experiences a business event "pushes" the event to the recipient
3. Business events are pushed immediately and simultaneously to all interested parties
4. The meaning and attributes of each business event is documented as a process is developed and is shared across multiple processes within the system
5. Event notification are managed in a systematic way